UPDATE 5-U.S. Congress delays budget fight until Monday

Fri Sep 23, 2011 3:50pm EDT

* Dispute threatens disaster aid after flooding, fires

* Senate Majority Leader Reid calls for cooling-off period

* U.S. federal government shutdown seen as unlikely (New throughout)

By Andy Sullivan

WASHINGTON, Sept 23 (Reuters) - The U.S. Congress set the stage for another last-minute budget showdown as lawmakers delayed action on a broad spending bill until Monday, shortly before disaster relief funds will run out completely.

This time, the brinkmanship threatens to disrupt assistance to victims of floods, wildfires and other natural disasters in one of the most extreme years for weather in U.S. history.

That money could run out as soon as Tuesday, but Republicans and Democrats appeared no closer to a solution after a week of legislative maneuvering.

A billion-dollar dispute over an electric-vehicle program favored by Democrats is preventing Congress from passing a trillion-dollar bill that would replenish disaster funds and ensure the government keeps running past Oct. 1, the start of the new fiscal year.

"Everyone, once in a while, needs a little cooling off," Senate Democratic Leader Harry Reid said. "We'll come here Monday and more reasonable heads will prevail."

Reid spoke after the Democratic-controlled Senate, by a vote of 59 to 36, rejected a version that had passed the Republican-led House of Representatives.

Lawmakers have tried to lower the temperature on Capitol Hill after a series of acrimonious budget battles rattled markets, spooked consumers and disgusted voters.

Still, the stark partisan divide over spending that has dominated Washington this year once again threatened Congress' ability to pass even the most basic legislation.

The bill in question would give the Federal Emergency Management Agency more disaster relief money and ensure that the government can continue operating while Congress debates a full 2012 budget.

Failure to act by then would force the government to suspend everything from space exploration to river dredging. It also would disrupt a flood-insurance program, delivering a further hammer blow to the troubled housing market.

ADDING TO UNCERTAINTY

Analysts and lawmakers said a government shutdown remains unlikely at this point as Congress now routinely resolves budget disputes at the last possible minute. But the wrangling adds further uncertainty to markets that are already on edge.

"Something like this is just a reminder of a lack of policy response by government, not only here in the U.S. but across the globe, in coming up with solutions to the financial and economic problems that we face," said Gary Pollack, managing director at Deutsche Bank Private Wealth Management.

Democrats and Republicans remained at odds over a $1.5 billion cut to an electric vehicle program championed by President Barack Obama.

Republicans proposed the cut to partially offset the added disaster costs to avoid adding to the nation's fiscal woes.

Democrats point out that Congress usually exempts disaster money from normal budget rules. They say the cut would threaten thousands of manufacturing jobs at a time when the country is struggling with 9.1 percent unemployment.

The Senate is scheduled to vote on Monday on a version of the bill that would restore the car loan program. The chamber's top Republican, Mitch McConnell, predicted it would fail.

The dispute throws into question lawmakers' ability to find common ground on the more painful choices they will have to confront in the coming months as a special bipartisan committee searches for trillions of dollars in budget savings.

"Any delay that occurs because of inaction in the Senate will only imperil needed disaster relief for these thousands of families all across our country," House Speaker John Boehner, the top Republican in Congress, said at a news conference.

Boehner has so far declined to give ground to Democrats as he seeks to control a rebellion from his party's conservative Tea Party faction, which is pressing for deeper spending cuts.

Democrats have shown an increased reluctance to compromise after a year of bruising budget battles has left their liberal supporters feeling like they have already given away too much.

Budget fights in Congress earlier this year pushed the government to the brink of a shutdown in April and the edge of default in August, leading to a cut in the country's top-notch AAA credit rating.

(Additional reporting by Donna Smith, Susan Cornwell and Thomas Ferraro in Washington and Karen Brettell, Rodrigo Campos and Richard Leong in New York; editing by Ross Colvin and Eric Walsh)

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Comments (3)
Beachdudeca wrote:
Congress needs stop making a funding cut of a program they do not like so that a funding expense they want can be made.
The agreement was that if the budget cuts could not be agreed upon then cut would happen to all programs.
The spiral the markets had this week is due in part of investors being made aware again that the Congress will continue to play a game of chicken in regards to the economy.
Even if i agree that cut need to be made this is the wrong way to do it.
At this point I think that maybe we should just shut down FEMA , and turn disaster relief over to the states ,, that is including those currently needing or getting any aid.

Sep 23, 2011 4:28am EDT  --  Report as abuse
Patriot_70 wrote:
So, while the entire country is screaming at Washington, “QUIT SPENDING.” Democrats hold the country hostage to keep thier precious spending bills in place. They are willing to derail out entire nation and put us all in danger to preserve thier pet projects.

Then, of course, it will be Republicans fault that things are getting so messed up because we won’t let them just spend like there is no tomorrow.

Sep 23, 2011 11:19am EDT  --  Report as abuse
djaymick wrote:
For a body (the Senate) that hasn’t even proposed a budget and has blasted anything that the House has passed, it shows you who the “party of no” really is. Harry acts like a dictator who believes he can command from his throne until he gets something he wants. Well, our government doesn’t work that way and never has. That’s what conference committees are formed to do – reconcile the two budgets from the House and Senate and settle on a compromise.
Until the media starts educating the public about the true way things have worked, the Democrats will continue to use these tactics. So, when the government shuts down and the Democrats and media complain about the “do-nothing” House, most people who know how things work will continue to lose faith in both of them.

Sep 23, 2011 11:24am EDT  --  Report as abuse
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